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Which US funds rallied strongest since the presidential election?

06 December 2016

Some fund managers have benefited since Donald Trump was declared president-elect on 9 November, as US markets have shrugged off concerns over the political change.

By Rob Langston,

News editor, FE Trustnet

Despite concerns voiced before the US presidential election about the impact populist Republican candidate Donald Trump might have on markets, equities have held firm given he was seen as the ‘bad’ candidate to win.

While the result came as a surprise to some, global markets have remained broadly stable and made gains in some cases as investors looked past some of Trump’s outspoken views and focusing on his more reflationary proposals.

Between 9 November and 30 November, the S&P 500 index returned 1.35 per cent, while the small cap-focused Russell 2000 was up by 6.96 per cent, compared with a flattish return of 0.64 per cent for the MSCI World index.

David Absolon, investment director at Heartwood Investment Management, says investor concerns about a Trump victory had been exaggerated.

"Despite fears that a Trump victory would be a negative risk-event, quite the reverse has happened. The four main benchmark US indices have hit record levels in November," he said.

"The standout performer has been US small-cap stocks, which have enjoyed their longest consecutive-day winning streak since 1996."

S&P 500 vs Russell 2000 index from result to end of month

   
Source: FE Analytics

Indeed, a number of fund managers have benefited from the market’s reaction to the election of Trump. The average IA North American sector fund rose by 4.29 per cent between 9 November and 30 November, while the average IA North American Smaller Companies sector fund performed even better, returning 9.71 per cent.


The strongest riser from the IA North American and IA North American Smaller Companies sectors the VT De Lisle America fund, managed by veteran fund manager Richard de Lisle, rising by 13.63 per cent between the declared result and the end of the month, according to data from FE Analytics.

In the IA North American sector, the larger of the two US-focused fund sectors, several other funds showed strong returns.

The £116.3m Investec American fund managed by Alessandro Dicorrado rose by 9.01 per cent, while the £77.3m BlackRock US Dynamic fund, overseen by Peter Stournas, was up by 8 per cent.

Other strong performers included: Legg Mason IF Clearbridge US Equity fund, which rose by 7.96 per cent; the CF Canlife North American fund, up by 7.81 per cent; and the JOHCM US Small Mid Cap Equity fund, with a return of 7.61 per cent.

Top IA North American fund performers vs sector and S&P 500 post-election

 
Source: FE Analytics

Broadly smaller companies have been among the biggest winners in the immediate aftermath of the presidential election. Several funds focused on the lower end of the market cap scale produced double digit gains in the post-election period.


The best performing North American Smaller Companies sector fund was the £217m Legg Mason IF Royce US Smaller Companies fund, managed by Lauren Romeo, which rose by 13.49 per cent in the post-election period.

Also posting double-digit gains was the Allianz US Small Cap, JPM US Smaller Companies, the Jupiter US Small and Mid Cap Companies, and Schroder US Smaller Companies funds.

Legg Mason IF Royce US Smaller Companies vs sector and Russell 2000

 
Source: FE Analytics

Heartwood’s Absalom noted that the post-election rally appeared to be “technically driven, as investors chase returns into year-end”.

He added: “Of the total equity inflows, the primary beneficiary has been US equities, specifically smaller companies, financials and industrials.”

Francis Gannon, co-chief investment officer of Legg Mason subsidiary Royce & Associates, says while the election had proved successful for small-cap stock holders, it may prove more difficult to find value in the near-term.

“In the Russell 2000, you had a market that gained about 10.2 percent [after the election], a powerful move by any stretch of the imagination, in what has been a particularly wild year within small caps,” he explained.

“We were getting a little bit excited about being able to find opportunities as valuations were coming down going into the actual election, but then returned where we had been from a peak valuation standpoint. The uncertainty level here is increasing, and there are risks that we have to think about.”

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Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.